District of Massachusetts Grants Class Certification in Wage Case

In George v. NWMCC, CA No. 10-10289-DJC (D. Mass., September 27, 2012), United States District Judge Denise Casper granted class certification to a group of employees and former employees of National Water Main Cleaning Company (NWMCC), a provider of sewer and catch basin cleaning services (among other things). The plaintiffs, who worked on municipal contracts subject to state prevailing wage laws, alleged that NWMCC failed to pay them the statutory prevailing wage rate for all work subject to that rate; failed to pay overtime based on a “blended formula” (i.e. used the lower rate to calculate overtime due); and deducted wages when employees failed to meet certain productivity quotas. Their motion for class certification proposed three subclasses, made up of workers subject to Massachusetts, Rhode Island, and Connecticut wage laws.

NWMCC opposed class certification, in large part on the ground that individual inquiries predominate over any common issues of law or fact. Specifically, NWMCC argued that its payroll practices were designed to satisfy its minimum wage obligations, that it paid the prevailing wage rate for certain work where it was not required to do so, and that it paid for certain benefits in addition to the cash wage. For these reasons, NWMCC took the position that the only way to determine liability was to (1) conduct a detailed week-by-week, employee-by-employee examination of the employees’ time cards and whether the time reported was accurate; (2) calculate the amount of wages due at the prevailing rate; (3) calculate the amount of wages due for non-prevailing wage rate work; and (4) compare the amount actually received by each employee to the sum of prevailing wages and non-prevailing wages due.

In her well-written decision, Judge Casper carefully addressed each of the Rule 23(a) and 23(b)(3) factors, concluding with relative ease that the plaintiffs established numerosity, typicality, and adequacy of representation. The bulk of the opinion discussed commonality and predominance, the more difficult questions.

First, Judge Casper rejected NWMCC’s argument that commonality was absent because liability could be established only after analyzing each class member’s individual circumstances. Citing Wal-Mart Stores, Inc. v. Dukes, she stated that “claims of harm arising from a truly common source, such as illegal bias arising from a particular supervisor, can provide the common contention required for a class action.” The named plaintiffs, she found, alleged harm from the same source: e.g. failing to pay laborers the statutory prevailing wage rate, failing to compute overtime pay using the legally required formula, and failing to compensate workers for travel time. Judge Casper concluded that what damages should flow to these workers if the injury was proven was a separate question, not relevant to commonality.

With respect to the predominance factor, NWMCC argued that individualized issues overwhelmingly predominated because, again, it would be impossible to ascertain violations without considering individual circumstances. NWMCC presented evidence that the amount of time spent performing prevailing wage rate tasks varied significantly from day-to-day and job-to-job and some of the plaintiffs overstated the hours worked on their time cards. These variables factored not simply into damages, NWMCC argued, but liability, since it could not be liable for a wage violation unless an employee was actually underpaid, which could not be determined without considering facts that necessarily vary from plaintiff to plaintiff.

Judge Casper rejected this argument too, finding that the common questions—such as whether NWMCC paid less than the prevailing wage rate for qualifying work, deducted wages when employees failed to achieve measures of productivity, used the correct overtime calculation, etc.—predominated and were amenable to class-wide resolution because they turned on NWMCC’s common policies and not on questions relevant to particular individuals.

It is perhaps not surprising that the questions, as characterized by the plaintiffs, were found to satisfy the commonality and predominance tests. But, unlike the example of the biased supervisor offered in Dukes, the answers to these questions will not necessarily dictate NWMCC’s liability. NWMCC’s point was that it is not enough for the plaintiffs to prove that it failed to pay the prevailing wage rate for certain work or that it failed to utilize the correct overtime formula. For NWMCC to be liable, the plaintiffs must prove that they were actually underpaid; and, considering the way that NWMCC paid its workers and the way its workers recorded and reported their time, to prove that they were underpaid, the judge or the jury will be required to delve into individualized facts.

These arguments were not lost on Judge Casper. However, she declined at this procedural juncture to address them, instead finding that “whether the alleged wage violation comes from use of a particular wage algorithm, or whether the violation only results if the employees are not paid at least their required wages over the pay period is part of the dispute . . . and one question that must be determined in the course of this lawsuit.” This case therefore illustrates the tension between the prohibition against judging the merits at the class certification stage and the need, at times, to resolve preliminary legal issues in order to determine whether the requirements of Rule 23 are met. Had Judge Casper taken on this preliminary legal question and concluded that violations arise from actual underpayment (and not any common practice in the abstract), then it seems relatively clear that the plaintiffs could establish liability only through an individual inquiry into each employee’s right to recover damages, making this case inherently unsuitable for class treatment.